Activision Blizzard, Inc. (NASDAQ: ATVI) stock was plunging Friday after game developer Bungie announced it was ending its contract with Activision and would retain rights to the "Destiny" game franchise.
The split led KeyBanc Capital Markets to lower its price target for Activision Blizzard.

The Analyst

KeyBanc analyst Evan Wingren maintained an Overweight on Activision Blizzard and lowered the price target from $80 to $64.

The Thesis

The loss of "Destiny" will be a short-term revenue and earnings issue for Activision, Wingren said in a Thursday note.

A joint statement from Activision and Bungie this week said Activision will “increase its focus on owned-IP and other projects,” but didn’t give a reason for Bungie taking over the "Destiny" franchise.

“By ending the relationship, (Activision) is implying that despite an impact to near-term earnings, it sees higher terminal value in deploying development resources elsewhere,” Wingren said.

Price Action

Activision Blizzard was trading down 9.55 percent at $46.44 at the time of publication Friday.